TOP NEWS IN EUROPEAN FINANCIALS
– The Italian government could sell another 10% to 15% stake in Banca Monte dei Paschi di Siena SpA as it continues to return the lender to private ownership, Reuters reported. The government is planning a share placement to raise as much as €900 million, sources told the news wire. The government currently owns 26.7% of Monte dei Paschi, which it rescued for about €7 billion. EU rules require Italy to reprivatize the bank. Economy Minister Giancarlo Giorgetti previously disclosed a plan for another market placement before the end of 2024.
– UK fintech TrueLayer Ltd. raised another $50 million in a funding round led by venture capital fund Northzone, Bloomberg News reported. The latest financing — an extension to a $130 million round in 2021 — valued Truelayer at about $700 million, 30% down from its previous valuation of $1 billion, a source told Bloomberg. This meant the company had lost its unicorn status.
➤ UniCredit acquiring Commerzbank would carry profit, execution risks
Buying Commerzbank would give Italy's UniCredit greater reliance on a less profitable banking market, while integration challenges could also reduce anticipated synergies.
➤ 'Vanilla' deals point to late-2024 bank M&A improvement
Despite bank M&A deal counts still being below recent historical levels, advisers say newly announced deals show signs of market improvement.
READ MORE about the liquidity crunch and the fallout for the financial sector in our new Issue in Focus.
BANKING
– UK-based HSBC Holdings PLC is planning a significant risk transfer (SRT) linked to an approximately €2 billion book of European corporate loans, insiders told Bloomberg News. SRTs have become a popular means for banks to reduce risks in their balance sheet. An HSBC representative declined to comment.
– Russian lender VTB Bank PJSC plans to bring its holding in PJSC Post Bank to 100% from 50% currently and could pay 36 billion rubles for the stake based on a valuation of 72 billion rubles, Interfax wrote. VTB considers the valuation to be fair and intends to proceed with the transaction, VTB's first deputy head, Dmitry Pyanov, told Interfax. VTB Bank is acquiring the stake from the Russian Post.
– CaixaBank SA's upcoming strategy will feature technology and AI as key pillars, sources told Bloomberg News. CEO Gonzalo Gortázar Rotaeche's upcoming investor presentation will reportedly include plans to create a team of hundreds of AI and IT experts. The plan will also seek to assure shareholders that the Spanish bank can maintain profit levels despite declining interest rates, Bloomberg wrote. The plan is yet to receive board approval. A CaixaBank representative declined to comment.
– Dutch prosecutors will decide by the end of 2024 whether they will charge former ING Groep NV CEO Ralph Hamers for his role in the bank's noncompliance with anti- money laundering rules, Bloomberg News reported. The bank paid €775 million in settlement in 2018 when Hamers was at the helm. Prosecutors could also argue for acquittal or ask the court to refrain from prosecuting in 2024. ING declined to comment.
– S&P Global Ratings upgraded the ratings of Porto-based Banco Comercial Português SA, or Millenium BCP, to BBB from BBB-, with a positive outlook. Portuguese banks have maintained solid funding profiles and are benefiting from better access to foreign capital, Ratings said. Millenium BCP is expected to continue to benefit from strong earnings, and its efficiency will likely remain better than its peers.
FINANCIAL SERVICES
– The board of Sweden-based buy-now, pay-later firm Klarna Holding AB (publ) ousted Mikael Walther from their roster, sources told the Financial Times. Walther is seen as an ally of Klarna co-founder Victor Jacobsson, who continues to be a top shareholder even if he no longer holds an executive role. Walther's ouster is the latest development in the power struggle between Jacobsson and his co-founder Sebastian Siemiatkowski, who is currently CEO, as Klarna gears up for an IPO, the newspaper noted. A spokesperson for Klarna and Walther declined to comment.
POLICY AND REGULATION
– Claudia Buch, chair of the European Central Bank's supervisory board, expressed support for cross-border consolidation between European banks, saying at a conference that such deals "can provide opportunities to generate economies of scale and scope." Buch did not name any lender, but the comments come amid speculation that Italy-based UniCredit SpA could take over Germany's Commerzbank AG, Reuters noted. The ECB uses the same criteria to approve cross-border deals as domestic transactions, Buch said.
– François Villeroy de Galhau, a member of the European Central Bank's governing council, said the regulator will likely cut rates this month, Reuters reported, citing an interview with La Repubblica. The regulator cut rates twice in 2024 and is expected to become more aggressive during its next two meetings, according to the report.
– The European Central Bank could impose "periodic" penalties on some banks that are falling behind in addressing the climate risks carried by their portfolios, executive board member Frank Elderson said in a speech. The ECB is discussing an earlier round of fines it may impose, and the process to determine whether penalties will be charged is ongoing, Elderson said.
– The Bank of England must exercise caution in cutting interest rates more aggressively, according to Chief Economist Huw Pill. "[T]he need for such caution points to a gradual withdrawal of monetary policy restriction," Pill said during a conference. The comments followed remarks by BoE Governor Andrew Bailey that the UK central bank might may cut borrowing costs more aggressively, Reuters noted. The BoE cut rates in August, the first in over four years. Its next meeting is in November.
– Austria's Financial Market Stability Board recommended that banks build up an additional 1% risk provisioning for loans granted to finance property to guard against a slump in the country's property market, wrote Der Standard. The crisis in the sector, triggered by rising interest rates and price increases, has led to an increase in loan defaults, with the nonperforming loan rate recently doubling to about 5.5%, according to the report. Risk provisions have lagged overall, while value adjustments have fallen by about 10% during the same period.
– Germany, France and Italy urged the European Union to show restraint in financial rulemaking and instead focus on boosting the competitiveness of its banking sector so lenders will have "a level playing field" with other major jurisdictions, Bloomberg News reported, citing a joint letter to the director general for financial services.
– Industry lobby group UK Finance called on the government to establish a "road map" for taxation, specifically one for banks. The group urged the removal of the bank corporation tax surcharge and the bank levy over time to make the tax rate more in line with other countries. The recommendation was part of UK Finance's submission ahead of the government's first budget statement.
INDUSTRY NEWS
– S&P Global Ratings upgraded Serbia's ratings to BBB- from BB+, with a stable outlook, citing better economic resilience. A strong macroeconomic management is expected to persist in the coming years, Ratings said. This was the first time Serbia's ratings reached investment-grade status, according to Bloomberg News.
Eden Estopace, Daniel Stephens, Esben Svendsen, Beata Fojcik, Yael Schrage, Brian McCulloch and Praxilla Trabattoni contributed to this report.
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